Lee Chang-yong warns against semiconductor supercycle optimism

Former Bank of Korea Governor Lee Chang-yong has issued a warning against excessive optimism regarding the semiconductor supercycle. Appearing on the YouTube channel 'Syuka World', Lee expressed skepticism toward expert predictions that a semiconductor boom will last for a decade, noting that even industry specialists failed to predict the current cycle a year ago.

Lee highlighted that the current prosperity is partly driven by US-China tensions, which have restricted China's access to advanced lithography equipment from companies like ASML. He warned that if US-China relations improve or if China develops its own equipment, the competitive advantage of South Korean firms like Samsung Electronics and SK Hynix could diminish.

Furthermore, Lee cautioned against basing national policy or long-term fiscal expansion on temporary tax revenue increases from semiconductor profits. He argued that such reliance could lead to economic instability if the cycle ends abruptly. He also addressed monetary policy, defending his past decisions and suggesting that the floating exchange rate system should be allowed to function as a shock absorber during periods of currency volatility.